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April 15, 2009



In the 80s a lot of Laffer Curve enthusiasts actually advanced the idea that by lowering taxes, the economy would be spurred and total receipts would actually increase. If my history is correct, Bob Dole was the one who labeled this "Voodoo Economics," which is part of the reason I was so positive about him in '96 until he got on the Kemp team. In any case, one could argue that the extended slump during Bush I was due to similar fiscal stimulus. Sure, it was a tax cut more than a spending boom, but when you're borrowing money to do it, it looks somewhat the same. In any case, it only supports Nathan's analysis of Reich's argument.

Nathan Smith

Didn't total tax receipts increase in the 1980s? I mean, maybe they didn't increase relative to what they would have been (how can we know?) but relative to what they had been, in real terms?


I'm sure they did, though over the course of a decade it would be shocking if not. More interesting would be a comparison with other decades' growth.

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